Tyson Foods, Inc. (NYSE: $TSN) is a multinational food company focused on protein that is based in Arkansas. It is the second-biggest meat processor worldwide and supplies nearly 20% of the chicken, pork, and beef in the US. It is also America’s largest beef exporter.
On Monday, May 6, 2024, before markets opened, Tyson Foods released its second quarter fiscal 2024 results to a negative market reaction.
Tyson Foods Releases Mixed Q2 Results
In the second quarter, Tyson Foods reported revenue of 13.07 billion, a 0.5% decline from the previous year’s $13.13 billion and below estimates of $13.16 billion. Operating income came in at $312 million, a 737% improvement from the $49 million operating loss reported the previous year, driven by operational improvements.
GAAP net income per share improved to $0.41 compared to the $0.28 loss per share recorded the previous year and above expectations of $0.39. On an adjusted basis, net income came in at $0.62, beating expectations of $0.40 by 56.8% and a huge improvement from the $0.04 adjusted loss per share the previous year.
The GAAP operating margin improved to 2.4% compared to a negative of 0.4% the previous year. On an adjusted basis, the operating margin improved to 3.1% compared to 0.5% the previous year.
At the end of the second quarter, Tyson Foods had a strong balance sheet, with around $4.4 billion in liquidity, driven by the issuance of $1.5 billion in senior notes.
Tyson Foods Outlook for Fiscal 2024
In its Beef segment, Tyson Foods anticipates an adjusted operation loss of $400M-$100M for fiscal 2024 based on USDA projections of a 2% decline in US domestic beef production.
The company forecast a FY24 operating income of $50M-$150M for its Pork segment based on USDA projections of a 3% increase in production in fiscal 2024.
It expects a FY24 operating income of $700M-$900M in its Chicken segment based on USDA projections of a 1% increase in chicken production in fiscal 2024.
In the Prepared Foods segment, Tyson Foods anticipates a FY24 operating income of $850M-$950M. The company is anticipating adjusted results in its international segment to improve in fiscal 2024. For the whole company, Tyson Foods anticipates a FY24 adjusted operating income of $1.4B-$1.8B.
Revenue is expected to remain relatively unchanged in FY24 compared to FY23 revenue.
Expenses and Liquidity Forecast
Tyson Foods anticipates a CapEx of $1.2B-$1.4B in FY24, while net interest expense is expected at around $400 million for the fiscal 2024.
At the end of the year, the company forecasts liquidity of $1 billion, and it expects to use its current liquidity to retire around $1.25 billion in senior notes that are due in August 2024.
TSN Stock Performance
Following the mixed Q2 results, Tyson Foods stock sank 7.46% to $57.40 as of 11:13 AM in New on Monday, May 6, 2024. However, the stock is still up +6.37% this year, outperforming peer ADM, which has sunk 18.17% YTD. Over the past 52 weeks, the stock is up 20.15%, underperforming the SPX, which is up 22.38% in the same period.
Analysts’ Outlook on Tyson Foods
Eight stock analysts give Tyson Foods an overall hold rating. They forecast a wide range for the stock, with a high of $62 and a low of $48. Their average price target of $55 is a 3.80 downside based on the most recent price.
Should You Buy TSN Stock?
Tyson Foods’ recent results point to a firm on the rebound; its margins and operating income have significantly improved. However, its revenue miss proved too much for investors. Additionally, the cautious sales outlook suggests investors would be wise to stay on the sidelines and watch how it adapts to changing market conditions.
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